Forward planning: The Post Office estimates that £21m is wasted buying currency at the last minute at UK airports. Photograph: Christopher Furlong/Getty Images

The flight is booked, the capsule wardrobe packed and you've worked out the fastest way to the airport. There's just one more thing to sort out: your holiday cash. Getting the best deal can mean spending less on commission and charges and more on holiday treats, so here's a guide to arranging your foreign currency.

Buying cash

Ordering currency online, which can be picked up at the airport, is cheaper than exchanging it at an airport bureau de change – the Post Office says more than £21m is wasted annually on buying currency at the last minute at UK airports due to poor exchange rates and commission charges on lower-value transactions.

When buying currency, remember that commission-free doesn't necessarily equate to the best deal, as fees are likely to have been loaded into the rate. Also, be wary of flat fees and minimum charges: the latter make it more expensive to change small amounts of money, while the former can offer good value if you are changing larger sums of money. Watch out for handling fees, too, which are normally about £3 but can be higher.

Also, your own bank or building society might have preferential rates for account holders.

If you do end up buying currency over the counter, check if your debit card provider will charge an exchange fee. If so, you might want to withdraw cash and use that to pay for your travel money.

Travellers' cheques

These are a secure way of carrying your money abroad, because as long as you make a note of the cheque numbers you'll get a full refund if they are lost or stolen. However, the exchange rates are often poor and some come with high fees. Travelmoneymax found that for £100 you would get just €102 in euro travellers' cheques from Lloyds TSB.

When cashing cheques abroad you are likely to face an additional charge (normally an extra couple of pounds), so try and take your cheques in larger amounts as it will cost the same to cash £100 as it will £10.

You can pre-order cheques in the same way you can cash, but travellers' cheques do not always come in denominations that exactly match how much you wish to spend.

Pre-paid cards

These are easy to use because you simply load them with funds before you go on holiday, then use the card to withdraw cash from ATMs or to make purchases. All the foreign exchange specialists now offer them, along with travel agents and banks. Even supermarkets offer pre-pay cards, although they tend to be Travelex cards stamped with the supermarket's logo.

If you lose your pre-paid card you can cancel it or report it stolen, making it a reasonably safe way to carry money. But while some providers do not charge exchange fees, others will charge an initial set-up fee as well as fees on cash withdrawals and even top-up charges. Some pre-paid cards charge "inactivity fees", such as Ryanair's Cash Passport which slaps a £2.50 monthly charge on users if they do not use the card for six months.

You can buy specialist euro or dollar currency cards, which will be cheaper than using a debit card. The FairFX euro currency card special, for example, has no set-up fees if you apply via Moneysupermarket, and charges €1.50 on international ATM withdrawals. It currently charges £104 for €130, plus a £6 delivery charge. The my TravelCash euro currency card is free, has free international withdrawals and also offers 1% cashback on all purchases. It is currently charging £105 for €130.

Some pre-paid cards will only allow you to top up face-to-face, while others give you the chance to top up on the phone or on the internet.

Debit cards

Many debit card providers add a fee of about £1 for each purchase you make while on holiday, as well as fees of about £2 each time you withdraw money from an ATM. The exchange rate you will get from your own bank on overseas purchases is also generally worse than if you shopped around for currency.

For example, if you use a Barclays debit card overseas you will be hit with a 2.99% charge. On top of that, if you withdraw cash from an ATM you'll be charged 2% of the transaction (minimum charge £1.50, maximum £4.50), meaning £100 of euros will cost you about £5. If you're using a cashpoint in a country that's not part of Barclays' "Global Alliance" you'll also be charged a transaction fee over and above the foreign exchange charge.

Nationwide no longer offers free overseas withdrawals for current account customers, but is fairly competitive with a 2% transaction charge on spending or withdrawals and a flat £1 fee for using an overseas ATM.

That leaves Norwich & Peterborough building society's debit card, which still costs nothing to use overseas, and Metro Bank, which also allows fee-free purchases and withdrawals, though you have to open an account with the London-based bank in person to get the card.

Credit cards

In general, it's best to avoid using a credit card to withdraw cash abroad as you might at home: many providers will levy an exchange rate fee of up to 3%.

Some cards offer 0% on purchases for up to 12 months, but you'll have to double-check you are not hit with a loading fee and make sure there are no restrictions on overseas purchases.

The Post Office classic card is commission-free for use abroad and has a reasonable APR of 14.9%. There is an introductory offer for purchases of 0% a year fixed for three months, and an introductory offer for balance transfers of 0% per annum fixed for eight months. The Halifax clarity credit card also doesn't charge for overseas purchases.

Watch out for sneaky overseas retailers

Some merchants will offer to convert your bill into your home currency. This is known as "dynamic currency conversion" and will likely result in a higher exchange rate. Always check the bill before paying and make sure you are billed in the local currency.

This article contains affiliate links, which means we may earn a small commission if a reader clicks through and makes a purchase. All our journalism is independent and is in no way influenced by any advertiser or commercial initiative. By clicking on an affiliate link, you accept that third-party cookies will be set. More information.